The latest Boeing and aerospace news, including updates about the Boeing 787 Dreamliner, 747-8 and 737, Airbus A380 and A350, the anticipated Boeing 797 and Boeing jobs and layoffs

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Just again back on the nature of the problem and where it is, can you — is this problem isolated to a single structure? So like is it — I mean is it the Alenia piece? Is it the wing box from Fuji? Or does it involve stresses on several supplier components? Is it both starboard and port so that this is something that’s symmetrical around the aircraft? Or is it a single sided kind of issue?

Pat Shanahan – The Boeing Company – Airplane Programs VP and General Manager

I will jump in first and Scott can provide additional color. So it’s multiple structures and it’s an integrated design. So it’s both the wing out of Mitsubishi and the side-of-body, which is part of the center section out of Fuji. And the design and the models are developed concurrently by Boeing, Fuji and Mitsubishi. That is the nature of this integrated structure. So as we work through the solution, we will involve Fuji, Mitsubishi, and Boeing, in developing a comprehensive long-term answer. Scott?

Joseph Campbell – Barclays Capital – Analyst

And it’s both sides, but not the Alenia structure?

Scott Fancher – The Boeing Company – 787 Vice President and General Manager

Correct, and it is symmetric. As Pat mentioned, every — all of our partners that have structure in this area and participated in the design are on the team to determine what the modifications are for this area.

Joseph Campbell – Baclays Capital – Analyst

So just to not — hopefully this can be the end of this. Somebody asks before it was along the entire wing, so it’s — if you were to describe from the aft to tail or under the belly or wherever these are located, is it possible to take the multiple several inch — one or two square inch places and identify how many of them are there and from the furthest point away, how big is the section affected?

Scott Fancher – The Boeing Company – 787 Vice President and General Manager

This is Scott Fancher. Let me try and take a crack at that. As we mentioned earlier, we are talking on a one or two square inch area. It is along the side-of-body join between the wing and the side-of-body and particularly — and specifically limited to the upper portion of where the wing and side-of-body join. And about 18 locations on either side of the aircraft for a total of 36 locations. The exact number may change a little bit as we analyze it, but that’s approximately the number.

And I really want to emphasize we are talking about a one or two square inch area along that upper wing join area in multiple locations. This is not a problem that extends out the wings or down into — it is into the aircraft. It’s a very limited area that needs structural reinforcement. The modifications, again to emphasize, we are talking about a handful of parts at each location and each one of those parts you could literally hold in your hand. They will be about the size of your hand or smaller. So not complicated by any means.

Paul Merrion – Crain’s Capital Business – Media

Hi. I just wanted to go to the issue of the credibility in the company’s schedule and predictions of schedule. You knew about this as of late last month, you said. Why wait until now to say anything at all about it? Including when the world’s attention was on Boeing last week at the Paris Air Show.

Scott Carson – The Boeing Company – President and CEO

Paul, this is Scott Carson. When we were at Paris last week we had been through the preliminary analysis of the data and were of a mind that the airplane could enter flight test with a credible flight test envelope as we worked relatively minor modifications.

The work done by the team through the week last week narrowed the envelope to the point where on Friday we determined that to fly would be such a small envelope for us that it would be an interesting exercise in having the airplane in the air but not particularly useful in terms of preparing the airplane for certification.

So at that point is when we made the call to delay the process, identify the fix, test the fix, install the fix, and then enter a flight test program that is fully robust.

Paul Merrion – Crain’s Chicago Business – Media

So what would have been the worst case if you had flown? Are we talking about cracks in the fuselage or the wings falling off or what — if you hadn’t made this fix before flying?

Scott Fancher – The Boeing Company – 787 Vice President and General Manager

The answer is our assessment is likely nothing would have happened. This is an issue where stress concentrations departed from the model. Absent being able to anchor those two pieces of data together with confidence based upon our design process, we would have had to reduce the flight envelope we were willing to fly and that gets you into the line of logic that Scott just outlined for you.

So it really isn’t a matter of yes and no. It is gee, because we’ve seen this departure and haven’t been able to anchor the data back to the model with sufficient confidence, we need to narrow our margins and that led us down the path that Scott described.

Pat Shanahan – The Boeing Company – Airplane Programs VP and General Manager

And we are always staying in process. And when the process says stop, we stop.

Scott Carson – The Boeing Company – President and CEO

Absolutely, absolutely.

Howard Rubel – Jefferies & Co. – Analyst

Thank you very much. I mean you are talking about a number of parts that sound like you could put them in a grocery bag but maybe 50 pounds, 60 pounds. But can you talk a little bit about the dollar outcome, Scott, that we are seeing here? Are we talking hundreds of millions of dollars or are we talking just a few million to get this started and fixed?

Scott Carson – The Boeing Company – President and CEO

Howard, I think it is premature to forecast where we are in dollars. We understand the nature of the fix and I would say the nature, not the specifics of the fix yet, because we have to complete the models, run those models, and then test the solution.

As we get through those steps, I think we will be in a better place to talk about the magnitude of the dollars. The fix itself does not appear to be a big dollar item. Obviously we need to understand the implications of the flight test program and first deliveries
to assess that.

Howard Rubel – Jefferies & Co. – Analyst

Are we going to see though a day-for-day delay with this and the whole schedule or are there some other items that you might want to also incorporate to increase the margin for discovering additional unknowns?

Scott Carson – The Boeing Company – President and CEO

We are going to continue to exercise the test program as Scott Fancher described in his comments. So whether it is day-for-day, I think again hard for us to call at this moment. We do believe we will be using the time productively however.

Howard Rubel – Jefferies & Co. – Analyst

So I just want to go back though the dollar amount. The fix itself just the titanium parts that you are talking about, is immaterial to the price of the airplane.

Scott Carson – The Boeing Company – President and CEO

Correct.

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